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Am I correct in saying one needs to make (sm)) - yochana

Posted: Aug 31, 2010

2 cpl extra when employed as an IC? Thus, an IC making 10 cpl is really clearing 8 cpl after paying taxes.

You need more than that. Dont forget health - insurance, bookkeeping, etc. - R.Raccoon

What? Employee pay taxes too. The only difference - is SM

[ In Reply To ..]
The only difference is IC pay the EMPLOYER part of taxes because IC is their own employer. However, that employer part IC pays is a write off. It is a business expense. IC does all their own paperwork and taxes rather than having employer take that same money out of net pay and sending it in. Ic sends it in herself.

What do you mean? I'm confused.. - s/m

[ In Reply To ..]
What do you mean - an IC paying the self-employment tax is a business expense? You can't write that whole 12.5% or whatever it is off, can you?

Employee and IC pay the same amount of taxes - except for SM

[ In Reply To ..]
Employer pays a % into taxes, the employer part. Since IC is her own boss, IC pays that employer % into taxes. That small % is the only difference between taxes paid by IC or employee. However, IC can use that % as write off since it is a business expense of IC. So basically IC and employee pay the same amount of tax, just IC sends it in instead of the employer taking it from employee check and sending it in.

OK, help me out here - I'm obviously stupid! - s/m

[ In Reply To ..]
On my 1040 line 27, you can take off 1/2 of self employment tax (attach schedule SE) which lowers the adjusted gross. Where are you writing off the whole thing - schedule C or CEZ? (Thanks for your input btw - I'm IC - been doing my own taxes for several years - have I totally screwed myself?!) Bad enough to feel screwed by my hospital but now to think my own ignorance is costing me more! Looks like maybe I need a tax guy !

Oh, I dont know details, lol. This is why tax guy is better than - software. And of course, his fee is write off. nm

[ In Reply To ..]
x

Seriously - help me.. How to do this on tax form please?? - n/m

[ In Reply To ..]
xx

DIFFERENCE with taxes - checkwritinMT

[ In Reply To ..]
Employees have 7.5% for SS and Medicare paid by their employee. The employee pays the rest.

ICs have to pay 15% self-employment tax (i.e. SS and Medicare).

EmployERs pay federal UE on employees.

The benefit comes in the write-offs. While it may look like both are paid the same, the reality is, the IC gets to write a bunch of stuff that employees cannot necessarily do.

What if you have no real expenses to deduct- - s/m

[ In Reply To ..]
I'm IC full-time for one hospital. They provide equipment, dedicated cable and phone lines (accounts in their name - I never even see bills). I don't have seperate room to dedicate as office - work in bedroom - so can't write that off. I don't have health insurance to deduct cost of (unable to get private insurance because I have MS). Not enough medical bills to itemize (can't afford to see doctor unless emergency). What else is there to write off ? :{

Wow - some thoughts

[ In Reply To ..]
You said:
I'm IC full-time for one hospital. They provide equipment, dedicated cable and phone lines (accounts in their name - I never even see bills).

Well, I hate to break it to you AND them, but you're not an IC, you're an employee. That one line right there would have the IRS change your status immediately. They are just opting not to pay you as an employee which is, frankly, illegal on their part.

Next, THEY are in HIPAA violation and you may be as well, depending on the type of computer you're working on, how well it is encrypted and whether or not you have PHI on it.

If *I* were you, and needed health insurance (I have MS as well), I'd get them to reclassify me and give me benefits.

So, to answer your question, you're an employee (legally) not an IC (illegally) and you're right, by misclassifying yourself, you have no contractor write-offs, mostly because you're not a contractor tho!

Thanks for thoughts. Now I feel stupid - and sick! - But thanks, really. :] nm

[ In Reply To ..]

Not a minimal amount - wp51 typist

[ In Reply To ..]
I'm an IC. The difference is 7.5% of my income which is about $3000/year extra (out of my pocket) in Social Security Tax. That's not minimal. And because I do my own taxes, i know that, true, I do not pay FEDERAL INCOME TAX on that 7.5% ("sparing" me another $750), but that $3500 is included for everything else - Medicare taxes, state taxes, figuring out how much for itemized deductions, figuring out how much deduction for business use of my home, etc. I would say making an extra 2 cpl is a start.

Yes, my tax guy says I can write off the tax usually paid - by the employer since I am IC. nm

[ In Reply To ..]
x

I have never heard of an IC being able to deduct the employer percentage - Yochana

[ In Reply To ..]
of tax either. I do my own taxes also. I just never had the extra to use a tax person even though it is deductible I would still have to pay for it up front. My niece used to work at H&R Block....think I will talk to her. Thanks for the very enlightening facts!
p.s. to the above poster....don't feel stupid as you aren't the only one who didn't know this. LOL

It's called self-employment tax - not SS

[ In Reply To ..]
If you use Turbo Tax or similar program, it will make this deduction.

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